UKTI Aerospace Sector Short Term Business Attachment - India

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UKTI Aerospace SectorShort Term Business
Attachment - India

• 1st Monthly Report
• Prepared by Jaimie Rogers

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Introduction

• I have been seconded from Airbus UK for 6 months
  to work for Jim Feeney in the Aerospace Sector.
  My primary objective is to look at how we can add
  value to UK SMEs through engagement with the
  Indian Aerospace Market. I am looking to improve
  UK SMEs awareness of the Indian Aerospace
  Industry and capabilities. I aim to identify the
  main routes into market and current
  opportunities. I am also going to promote the UK
  Aerospace Industry in India and increase their
  awareness of UK capabilities.
• The intention of this report is to provide
  regular updates of
• My current activities
• What are the plans for the next month
• Opportunities
• Risk, Issues and Threats
• Financial Summary
• This first report will stick mainly to the high
  ground/ principles as this is where my research
  is currently, but should layout the streams of
  work that I will pursue over the next 4 months
  whilst in country.
• The opportunities, risks, issues and threats have
  been pulled together from the meetings and visits
  I have had in the UK in the last month.

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Achievements

• (This section will include activities in the last
  month, successes and actions)
• I have spent the last month travelling around the
  UK seeing a number of key organisations,
  companies and individuals
• A number of the UK Aerospace associations,
  including SBAC
• Several of the UKTI Aerospace International Trade
  Advisors
• 20 Aerospace SMEs
• Key people with UKTI, DTI and Deso that have
  interests in India and /or Aerospace Trade
• HAL Rolls Royce
• Contacts in Airbus UK
• Meeting the SMEs gave me a small insight of the
  diversity of the UK aerospace industry and what
  array of products and services the 3000 UK SMEs
  get involved with. Also the enthusiasm and drive
  that the challenges of the work are undertaken.
  More specifically, about companies involvement,
  interests, and concerns with getting 'involved'
  in India.
• Meeting the Associations and ITAs was useful in
  terms of their knowledge of SMEs and also trading
  with India. It was also important to meet them so
  that we have a face behind the phone calls and
  e-mails while Im in India.
• The meetings with Government departments let me
  tap into their experiences of working in India
  and specific issues and opportunities in their
  different fields, e.g. Deso - their interests in
  India, Julian Stretch - His overview and
  experience on what he sees going on in India and
  its future.
• This has prepared me as I start to look at the
  Indian Market from Bangalore.

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Actions in next month

• (Plan for the following months activities)
• Commission an update to the Genser Aerospace
  Report. Originally published in Oct 2005. 2 years
  later on it is important that the updated report
  captures amongst other things
• Level of growth forecast where are we now
  compared to the 2005 baseline?
• Who are the new players in the market
• Any current opportunities
• Making the update more focused on SMEs issues
  such as examples of how SMEs have already got
  into market
• Prepare for the Paris Airshow. Primary aim is to
  set up some 1 to 1s with UK and Indian SMEs.
• Commission a UK Aerospace Industry Brochure of UK
  Companies wanting to work with the Indian
  Aerospace Industry.
• At a high level make key individuals and
  organizations aware that I am in Indian and of my
  role. This will include visits to Delhi, and
  Mumbai to see
• UKTI and Deso
• SIATI, Indian MOD and FICCI, HAL, Key Indian
  Airlines
• In country Reps BAE Systems, Airbus, Rolls Royce
• Support EADS Supplier Selection Campaign in
  Bangalore as they look for offshore engineering
  service suppliers. This will be an opportunity in
  one week to meet 10 Indian companies providing
  Aerospace design services.

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Opportunities

• (General opportunities, why work in/ with India,
  Specific business opportunities from visits
  interviews, What is going on that may open up a
  route into market )
• Low Cost Opportunities - Manufacture/ Design
  Services
• Manufacturing There are a large number (over
  200) of Aerospace manufacturing companies in
  India. Of these there are currently about 20
  worth working with. They should only be
  considered of low end/ repetitive/ high labour
  intensive work, unless UK companies invest time
  in developing companies capabilities.
• Engineering Services There are a number of
  companies who are either pure Aerospace eg Quest
  or have an Aerospace division that has developed
  from a much larger division such as IT or
  automotive sector, such as Infosys and Incat from
  TATA. There are about 25 to 30 companies who we
  would consider as Engineering Services providers.
  Of that there are only about 15 who UK SMEs
  should considered working with. UK SMEs need to
  ensure that these companies are actually capable
  of deliver project requirements. In general the
  work should be straight forward design work e.g
  drafting, 2D drawings, CAD conversion, or stress
  work such as FEA generationgt Their strenght lies
  in tool knowledge not engineering knowledge
  (yet). As part of my research I intend to
  identify the companies UK SMEs should be working
  with, hence these initial numbers may change.
• Indian Open Skies Policy
• In 1998 there a relaxation of the restrictions on
  the Indian open sky policy which prevented
  private operators from competing in the Indian
  Civil Airline Market. This has allowed a number
  of private carriers to start and provide air
  travel to the huge Indian middle class (est. 300
  million people) Combining this with the huge
  economic growth in India has made the Indian
  civil aviation market on of the fastest growing
  in the World. Boeing predicts growth of 7.7 a
  year until 2025, 72 Bn in the next 20 years.
  This will provide opportunities not only in the
  export of products for these new aircraft but
  also services such as MRO, training and Airport
  services. There is currently no offset
  requirement on civil A/C but it is believed that
  this will shortly be put in place. Hence the OEMs
  are looking to notch up their offset credits.

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Opportunities

• Defense
• India is Desos number one market
• Indian culture is they like things cheap and want
  to use to its maximum, performance and
  timescales. E.g. they have an existing fleet of
  Jaguar that they will have in-service until 2035.
  Because of this these aircraft will require in
  service support. They also have Sea King
  Helicopters, Sea Harriers, Hawk and Goshawks
  which will all require various mid life updates.
  The Jaguar engines are shortly to go through a
  mid life update.
• The first of the Indian Hawk - Advance Trainer
  Fighters will be delivered later this year. Of
  the order of 66 A/C, 42 will be assembled in
  India by HAL. There maybe (to be confirmed)
  further opportunity as BAE Systems try to fulfill
  their offset commitment of 30 of the value of
  this contract. (The proposed law on defense
  offset is 30 on any contracts over 40M).
• The Indian Airforce are also looking for a new
  multi role combat aircraft. The order is expected
  to be about 120 aircraft. 50 will be probably be
  Russian, MIG 35, but the remaining will be a
  mixed order of F16, Typhoon, Griphen, Rapheal,
  Once again 30 of the value of these contracts
  will need to be offset in India.
• The downside of dealing with the defense industry
  is that this will involve dealing with HAL which
  is state owned. Which are classed as part of
  old india, where bureaucracy is king. HAL are
  also very status driven, who they will work with,
  what work they will take on. The simpler route
  would be to one of HAL 1st tiers.
• In both civil and defense markets there must be
  an opportunity in the UK for UKTI or SBAC to
  improve the link between the prime OEMs and their
  supply chain when products are sold abroad. This
  has to be a win/ win situation for all parties.

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Opportunities

• Skill/ Capability Market Gaps
• Although India has a a great education system and
  Indian Companies are very keen to get into the
  Aerospace they currently lack the key thing that
  gives them credibility -experience. Currently
  there are not the skills/ capabilities required
  to undertake some of the high end, high value
  work, such as conceptual design, product
  integration, primary structure stressing and
  design, high tolerance manufacture. There are
  opportunities to set up JVs, captives or provide
  consultancy.
• I aim to research these opportunities further
  over the 4 months. Clarify what the specific
  opportunities, and what further opportunities
  there are, e.g. the growth of civil/private
  helicopters No material suppliers in India.

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Risks/ Issues/ Threats

• (This will include what the competition are up
  to, blockers to market, issues with ways of
  working)
• Working with Indian Suppliers
• Indians want to work with UK companies. UK SMEs
  must be aware that Indians will always say yes
  or cannot say no. They will always say they can
  do something. Companies need to come into the
  market prepared and aware. Challenge and look
  that what companies are claiming is achievable
  based on their experience and current
  capabilities.
• Working with India is not for the quick gain.
  Neither is it where a company can drop work and
  forget about it. Time and money needs to be
  invested in
• The relationship
• Developing companies so that they can deliver to
  UK SMEs quality standards.
• (There are only 5 Indian Aerospace Companies
  currently who hold AS9100)
• Integration with the supplier setting up
  communications/ IT links/ processes and
  procedures/ transport
• When putting all this in place UK companies
  should be thinking about setting up a
  relationship with an Indian company for a minimum
  of 5 years. But even with all this pain there
  is still a significant commercial benefit to be
  had. Current average benefit is estimated at
  about 45.
• UK SMEs need think very carefully about what the
  benefit of putting work to India and the kind of
  work they should offload.
• They should analyse their work and decide what
  labour intensive, repetitive, low risk work could
  they put into an Indian company. Will it free up
  experienced/ skilled personnel and/or capacity on
  critical machinery that can be used for new
  orders to develop SMEs capabilities?

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Risks/ Issues/ Threats

• A number of large US companies are filling up the
  capacity in Indian manufacture. This raises to 2
  points
• 1 Not only are they doing it for offset but these
  companies see and understand the advantage of
  working with Indian companies
• 2 UK SMEs need to find out what work Indian
  companies are undertaking work for any large
  customers. The SMEs work may take a low
  priority.
• Other Issues
• When using agents ensure that they are not
  representing one of the competition. Agents are
  very much in it for themselves. (I think thats
  the PC way of putting it) But it is important in
  India who knows who Rolls Royce are looking to
  employ an Indian to support India sales director.
• Relationships. Relationships are valued. They
  want to determine if they can trust a company.
  This does not mean that it will take years before
  a company will get work. It may mean several
  trips in a relatively short space of time until a
  contract is in place.
• Foreign Investment can only be a maximum of 26
  in an Indian defense company.
• Interesting comment from Andrew Dinsley, Head
  BTO, Bangalore. If UK SMEs dont act now and use
  India for suppliers or partners then very shortly
  these Indian companies will become direct
  competitions or even the owners of UK SMEs.